The financial world has been enhanced by the ability to use computers to manage assets. Financial institutions extensively employ elaborate computer systems to direct and process the numerous accounts retained on behalf of the customers. These accounts routinely track individual assets for the account holder and permit timely updating thereof pursuant to transactions made by the account holders in accordance with the account restrictions. These systems are directed to accounts such as brokerage accounts wherein securities may be bought and sold with a minimal amount of paper work as the transactions and recordations thereof is fully automated within the computer.
More recently, systems have been developed that permit the integration of disparate types of accounts for a single account holder thus expanding substantially the account holders ability to control his/her assets. This is exemplified by the CMA.RTM. accounts which incorporate traditional check writing and credit/debit card features with brokerage and mutual fund accounts for a single user--integrated in a seamless fashion from the user's vantage.
The above-noted integrated account systems are best exemplified from a processing standpoint by the specific parents directed to their implementation. More particularly, U.S. Pat. Nos. 4,346,442, 4,376,978, 4,597,046 and 4,774,663 are directed to such integrated account processing by one or more digital computers and are herein incorporated by reference as if restated in full. Generally, the above-identified patents disclose a computer system for directing a plurality of securities brokerage/cash management accounts. That system, inter alia, supervises, implements and coordinates a margin securities brokerage account, and permits participation in one or more short term investments (e.g., money market or comparable funds).
In recent times, there has been an increasing desire by individual account holders to segment account functions into separately managed areas of financial interest. For example, account holders often desire the ability to provide separate account functions to other members of their families, or to separate specific expenses on an account basis, e.g., mortgage payments, etc. In the past, this has been accomplished by simply opening new accounts, fully featured, directed to the specific family member and/or specific expense.
By pursuing this tack, the account holder develops multiple disparate accounts--often functionally equivalent, but without inter-communication therebetween. The fallout of this is excessive expenditures in maintaining multiple accounts that lack any coordination and thus become difficult to manage by the individual.
Moreover, a financial management institution such as a brokerage house handles accounts for thousands of people, usually with each person having two or more separate accounts (i.e., a checking account, a money market account for long-term goals and a savings account). The lack of integration between multiple accounts held by the same individual or individuals within the same household introduces, from the brokerage house perspective an additional level of record keeping requirements and thus a corresponding increase in fees to the account holder. It was within the framework of the above understanding that the subject concept of nested integrated accounts was developed.
On the other side of this invention, one specific type of account has been proposed and undertaken to contain and manage the upward spiral of health care costs. Most reforms at health care costs, including managed care, deal primarily with the supply side of health care and are based on concepts of reducing or controlling costs, including administrative costs, and restricting access to providers. These approaches limit the patient's freedom of choice, inhibit the physician/patient relationship, degrade the quality of care, and perhaps even increase costs by transferring the financial responsibility from patients to third parties, resulting in increased demand for services by patients who do not have to lay out personal funds.
The particular account used for the Master/Subaccount relationship is a Medical Savings Account (MSA). The MSA is a new tax-advantaged savings account made possible by U.S. Congressional Legislation passed in 1996 for availability in 1997. These MSAs are emerging as an important means of restoring financial control of health care transactions to individual patients. Within the structure of the present subaccount system, the MSA subaccount will allow eligible individuals to merge one of life's most critical concerns--healthcare expenses--within the frame work of their entire financial portfolio. The central focus of this approach is on the demand side of health care. Since cost is a function of utilization, health care costs decrease when utilization decreases, which in turn occurs when people have the direct responsibility to pay for it. MSAs are a combination of high-deductible health insurance (sometimes referred to as catastrophic insurance) with a pre-funded, dedicated cash account to provide first-dollar coverage for all expenses up to the deductible. A properly managed MSA, be it employer-sponsored or an individual account, has the potential to reduce unnecessary claims paperwork, to increase direct employee compensation, and ultimately to reduce the aggregate cost of health care expenditures for both individual subscribers and employers.
In an employer-sponsored plan, the reduced premiums on the high-deductible insurance policy enables the employer to fund all, or a portion of, the annual cash contribution to the employee/subscriber's MSA. Any funds not expended from the MSA at the end of the year belong to the employee/subscriber.
In an individual or single coverage plan, the subscriber funds his own MSA, again, all or in part with the savings from the reduced insurance premiums. Recently proposed legislation provides tax treatment for MSAs similar to that of individual retirement accounts (IRAs), although withdrawals for medical purposes will not be taxed or penalized.
In either an employer-sponsored or individual MSA, the assets in the MSA belong to the subscriber. There is, therefore, a strong incentive for the subscriber to utilize only those medical services which are truly necessary, and to obtain the most economical service available. In other words, the physician/patient relationship takes on the essence of a traditional arms length business transaction with the patient shopping for the best value for his money, yet retaining complete decision making autonomy. Any year-end balance is controlled by the subscriber and may be used for future health care expenses, by law, funds not recovered from the account for medical expenses may also be invested in most of the products permitted in IRAs in order to allow the account holder to save times for future expenses, for retirement savings, or as the person desires.
Current implementations of the MSA concept suffer from the inhibition of fluid interaction and exchange of real-time information among financial services institutions, insurers, employers, and individual subscribers. Accordingly, the present invention is directed to a data processing system for implementing the MSA concept including: real-time transactions handling; paperless claims administration; provision for automatic conversion (with uninterrupted coverage) between employer-sponsored and individual subscriber MSAs; exchange of timely electronic information from the point of sale to both insurer and financial service institution; and most significantly, automated deposit and investment of funds; and provision for client modification of account parameters.